A proposal to introduce a so-called “pied-à-terre” tax in New York City has triggered debate over how governments should tax underused luxury properties.
The plan, put forward by Mayor Zohran Mamdani, targets high-value second homes that remain largely unoccupied. The term “pied-à-terre”, derived from French, refers to a secondary residence used occasionally—often by wealthy individuals who do not live in the city full-time.
Under the proposal, owners of residential properties valued above $5 million would face an annual tax if the property is not their primary residence. Supporters say the measure could generate additional revenue for the city while discouraging the underuse of housing in a market facing affordability pressures.
Critics, however, argue that such a tax may deter investment in high-end real estate and could have unintended consequences for the broader property market.
Globally, governments have experimented with unconventional taxes to address economic and social concerns. Historical examples include levies on windows, beards and salt, often introduced to raise revenue or influence behaviour.
India, by contrast, does not have a direct equivalent of a pied-à-terre tax. However, tax rules do include provisions that indirectly address ownership of multiple homes.
Under Indian law, homeowners can designate up to two properties as self-occupied, meaning no tax is levied on notional rental income. Any additional property is treated differently: even if left vacant, it is subject to tax based on an estimated rental value, often referred to as “deemed rent”.
Some states have previously experimented with related measures. For instance, Maharashtra once imposed a levy on larger residential properties, though this is no longer in force.
While India’s approach stops short of targeting luxury second homes specifically, both systems reflect a broader policy question: how to balance property ownership rights with the efficient use of housing stock.
